The ICAEW proposal would have lifted the requirement for a nominee to express an opinion about the likelihood of successful rescue before full plans were drawn up and funding obtained.
Corporate affairs minister Kim Howells insisted new legislation, providing moratoriums designed to promote company rescues, should take effect only after a nominee has given their opinion that there are reasonable grounds for confidence that a voluntary arrangement is likely to be approved and implemented.
Howells said the Insolvency Bill – which has been given final approval in the Commons – only requires nominees to express an opinion as to whether what is likely to be put to creditors would be workable, and not whether directors’ actual proposals are likely to be approved and implemented.
He said: ‘The requirement is important because the moratorium is not intended to be a refuge for hopeless cases.
‘If a company is to have the benefits afforded by a moratorium there should be reasonable grounds for confidence that a voluntary arrangement is likely to be approved and implemented,’ he added.
The ICAEW’s position was put to MPs by Tory corporate affairs spokesman Christopher Chope OBE, who warned ‘a moratorium may be needed to give time for a nominee to sit down with directors to find out whether proposals can be put to a creditors’ meeting with a chance of acceptance’.
The institute said: ‘We consider all that should be necessary to obtain a moratorium would be a requirement for the directors to submit to the court a petition giving the reasons why a moratorium is necessary, the name of the nominee and a letter of acceptance from the nominee and a funding proposal for the 28 days of the moratorium.’
The Tories did not press the issue to a vote.
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